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College of Business, Hospitality and Tourism Studies DEPARTMENT OF MANAGEMENT, IR & HRM

MGT703 STRATEGIC MANAGEMENT TUTORIAL 2(B) THE INTERNAL ENVIRONMENT

Groups Members Neha Nasheen Ali

2017144055

Raisha Khan

2016133911

Komal Reddy

2017142195 1

QUESTIONS 1. Name and discuss on the two major elements of the Internal Environment of a firm. Labour and Management Relationship Promoter’s vision 2. Identify and discuss the components of internal analysis and explain the 

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need for firms to study and understand the internal environment. Resources are the tangible or intangible assets of an organization essential for its activities and processes. They can either be outsourced or internally generated. Capabilities are the industry-specific skills, organizational knowledge or the relationships which are usually intangible in nature and can be generated through internal activities. Some competencies are unique to a specific organization in which they excel and these are called as their core competencies and are responsible for their competitive advantage. The resources generate the capabilities which in turn generate the core competencies which in turn give the value addition to the consumer market. The configuration of the organization is associated with the places where the organization’s activities in the value chain are performed while coordination is associated with the management of these activities. The configuration can either be a concentration meaning activities limited to a specific geography or dispersion meaning that the activities are spread across a large number of locations. Co-ordination can be either internal or external in nature. Internal coordination refers to the value-adding activities while external coordination refers to the suppliers-channels-customers linkages.

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 The organizational structure must be so designed that the business must accomplish its objectives effectively and efficiently while the culture determines the magnitude of this accomplishment.  Finally the performance of the organization is analyzed using a portfolio analysis which gives the evaluation on the organization’s range of products. An internal analysis is an exploration of your organization’s competency, cost position and competitive viability in the marketplace. Conducting an internal analysis often incorporates measures that provide useful information about your organization’s strengths, weakness, opportunities and threats – a SWOT analysis. The data generated by an internal analysis is important because you can use it to develop strategic planning objectives to sustain and grow your business. 3. Discuss how a sustainable competitive advantage of a firm can be achieved. New products and markets are continuously being created disrupting the traditional offerings. To succeed in this environment, your business needs to shake up the status quo and avoid competing in exactly the same way as your rivals. 4. Define ‘value’ and discuss the importance of creating value. Value- the regard that something is held to deserve; the importance, worth, or usefulness of something. Our values are important because they help us to grow and develop. They help us to create the future we want to experience. Every individual and every organization is involved in making hundreds of decisions every day. The decisions we make are a reflection of our values and beliefs, and they are always directed towards a specific purpose. That purpose is the satisfaction of our individual or collective (organizational) needs 3

5. Critically discuss on the challenges of internal analysis by Managers or Executives. Managers’ strategic decisions about resources, capabilities and core competencies are non-routine and have ethical and competitive

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implications. Managers must have: Courage self-confidence integrity the capacity to deal with uncertainty and complexity Willingness to hold themselves and other people accountable for their work.

6. Discuss three conditions or situations affecting strategic managerial decisions. Programmed versus Non-programmed Decisions Programmed decisions are made in predictable circumstances and managers have clear parameters and criteria. Problems are well structured and alternatives are well defined. The problems are solved and decisions are implemented through established policy directives, rules and procedures. Non-programmed decisions are made in unique circumstances and the results of such decisions are often unpredictable. Managers face illstructured problems. These problems require a custom-mode response and are usually handled by the top management. To start a new business, to merge with another business or to close a plant are all examples of non-programmed decisions. For example, when Steven Jobs and Stephen Wozniak introduced the first Apple microcomputer in 1978, they were not certain about the market for it. Today, Apple Macintosh computer is a major competitor to IBM computers. Information Inputs 4

It is very important to have adequate and accurate information about the situation for decision making, otherwise the quality of the decision will suffer. It must be recognized, however, that on individual has certain mental constraints, which limit the amount of information that he can adequately handle. Less information is as dangerous as too much information. Some highly authoritative individuals do make decisions on the basis of comparatively less information when compared to more conservative decision makers. Prejudice Prejudice and bias is introduced in our decisions by our perceptual processes and may cause us to make ineffective decisions. First, perception is highly selective, which means that we only accept what we want to accept and hence only such type of information filters down to our senses. 7. Identify and discuss four tangible resources and three intangible resources firms must have. Tangible

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8. Differentiate between a firms, resources, capabilities, and core competencies.Criticall Discuss how a firm can build or develop on its core competencies. Resources -are inputs into a firm’s production process. Are the source of a firm’s capability? Cover a spectrum of individual, social and organizational phenomena. Capabilities- are the firm’s capacity to deploy resources that have been purposely integrated to achieve a desired end state. Are often based on developing, carrying and exchanging information and knowledge through the firm’s human capital. Are often developed in specific functional areas, such as R&D and marketing. Core competencies -are capabilities that serve as a source of competitive advantage for a firm over its rivals. Distinguish the firm competitively and give it a unique identity. Emerge over time through an organizational process of accumulating and learning how to deploy different resources and capabilities 6

9. Describe four criteria used to determine whether resources and capabilities are core competencies.

10.Define value chain analysis. Explain how value chain analysis is used to identify and evaluate resources and capabilities. Value chain analysis allows the firm to understand the parts of its operations that create value and those that do not. It helps managers to understand a firm’s cost position. The value chain is segmented into primary and support activities. The firm that competes through differentiation advantage will try to perform its activities better than competitors would do. If it competes through cost advantage, it will try to perform internal activities at lower costs than competitors would do. When a company is capable of producing goods at lower costs than the market price or to provide superior products, it earns profits. 11.Define outsourcing and discuss the reasons for its use. Outsourcing is the purchase of a value-creating activity from an external supplier. A firm cannot possess the resources and capabilities it requires to achieve competitive superiority. 7

By outsourcing non-core functions a firm can concentrate on those areas in which it can create value specialty suppliers can perform outsourced capabilities more efficiently. Reasons for its use:  The main reason for outsourcing is that few firms possess the resources and capabilities to achieve competitive superiority in all primary and support activities.  When outsourcing, a firm seeks the greatest value from another firm. Preferably the supplier has core competency in the primary or support activities outsourced.

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